Brunei PROFILE CONTENTS

Transcription

1 Brunei PROFILE CONTENTS INTRODUCTION 2 LEGAL AND REGULATORY 4 TAXATION 6 BANKING 8 PAYMENT INSTRUMENTS 9 PAYMENT SYSTEMS 10 CASH MANAGEMENT 11 ELECTRONIC BANKING 12 TRADE FINANCE 13 USEFUL CONTACTS 15 Please note that rules, regulations and market practice are not necessarily documented and are subject to interpretation. In addition, they may change rapidly for economic, political and social reasons. As a result, the de facto enforcement and interpretation of regulations and market practice may diverge from the formal regulatory framework described in this country report. If you are planning any business activity in the country, we would recommend that you seek independent advice on the latest market and regulatory developments as well as legal and tax advice.

2 INTRODUCTION General Capital/Other major cities: Bandar Seri Begawan/Kuala Belait, Seria Area: 5765 km 2 Population: 0.41m Languages: Currency: Country telephone code: 673 Weekend: National holidays: Source: Business/Banking hours: Government Malay, English, Chinese (Mandarin) Brunei dollar (BND) Friday and Sunday 2nd half *, 15, 26* Jul, 8, 9, 10 Aug*, 15 Oct*, 5 Nov*, 25, 31 Dec , 14*, 31 Jan, 24 Feb, 27*, 31 May, 29*, 30 Jun, 15, 29, 30, 31 Jul*, 5, 25 Oct*, 25, 31 Dec , 3* Jan, Feb, 16 May*, 1, 18*, 30 Jun, 4*, 15, 18*, 19*, 20* Jul, 24 Sep*, 13 Oct*, 25, 31 Dec 08:00 17:30 (Mon Thu), 08:00 12:00 (Sat) 09:00 15:00 (Mon Fri), 09:00 11:00 (Sat) * The date shown may vary by plus or minus one day. These dates are derived by converting from a non- Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are determined by the sighting of a new/full moon. Legislature Sectoral distribution of GDP (% of GDP) Agriculture 0.6% Constitutional sultanate with a Parliament House (Dewan Majlis) composed of the Council of Cabinet Ministers and the Legislative Council. Council of Cabinet Ministers All members are appointed and presided over by the sultan. Legislative Council 33 members appointed by the sultan. The last election to the Legislative Council took place in March It meets once a year. Head of state and political leader Sultan Hassanal Bolkiah, head of state and political leader since 5 October Industry 71.7% Services 27.7% (2011 estimate) 2

3 Economy Q1 Q2 Q3 Q4 YEAR Exchange rate* (BND/USD)** Interest rate (lending rate)** (%) NA NA Consumer inflation*** (%) NA NA NA NA NA Unemployment (%) NA NA NA NA NA NA GDP volume growth*** (%) NA NA NA NA NA GDP (BND m) 18,458 20,398 15,611 16,867 20,579 NA GDP (USD m) 12,248 14,393 10,732 12,371 16,360 NA GDP per capita (USD) 32,231 36,905 27,519 30,926 39,903 NA Exports minus imports as % GDP NA NA NA * Official rate. ** Period average. *** Year on year. Source: IMF, International Financial Statistics, April 2013 and Department of Statistics Brunei Darussalam. 3

4 LEGAL AND REGULATORY Central bank Bank supervision Established in 2011, the Autoriti Monetari Brunei Darussalam (AMBD) is an autonomous institution operating in accordance with the Autoriti Monetari Brunei Darussalam Order, The AMBD s Banking and Specialised Market Supervision division supervises the banking sector within Brunei. Resident/non-resident status A company is considered resident in Brunei if it is formally registered at the Registry of Companies in Brunei and/or is centrally managed and controlled in Brunei. Bank accounts Reporting Exchange controls Foreign exchange accounts can be held by residents both domestically and abroad. Resident domestic currency (BND) accounts are freely convertible into foreign currency. Non-resident bank accounts are permitted in both foreign and domestic (BND) currency. Non-resident domestic currency accounts are freely convertible into foreign currency. Interest can be offered on current accounts, savings accounts and demand deposits. Overdraft facilities are available to residents. Brunei applies limited reporting requirements for companies. Brunei is a member of the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC). The Brunei dollar (BND) is Brunei s official currency; the exchange rate is managed through a currency board that maintains a parity with the Singapore dollar (SGD). The Brunei dollar is managed, together with the SGD, by the Monetary Authority of Singapore (MAS). Banks and authorities in Singapore and Brunei must accept each other s currency at par, without charge. The currencies are customary tender in each country. Brunei does not apply exchange controls. There is no forward market for foreign exchange in Brunei. 4

5 Anti-money laundering/counter-terrorist financing Supplied by BCL Burton Copeland ( Data as at January Brunei has enacted anti-money laundering legislation (Money Laundering Order of 2000; Criminal Conduct (Recovery of Proceeds) Order of 2000; Drug Trafficking (Recovery of Proceeds) Act of 2002; the Anti-Terrorism (Financial and Other Measures) Act 2008; the Anti-Terrorism Order 2011, as amended 2012; and the Criminal Asset Recovery Order 2012). Brunei is a member of the Asia/Pacific Group on Money Laundering (APG). In June 2011, Brunei made a high-level political commitment to work with the Financial Action Task Force (FATF) and the APG to address its strategic AML/CTF deficiencies. FATF s October 2012 report observed that although Brunei Darussalam has taken steps towards improving its AML/CTF regime certain strategic deficiencies remain. Brunei has established a financial intelligence unit (FIU), under the Financial Institutions Division in the Ministry of Finance. Account opening procedures require satisfactory evidence of the customer s identity. Customers must be identified when establishing a business relationship; for one-off transactions when money-laundering is suspected; for oneoff transactions of BND 20,000 or more; and for related transactions of BND 30,000 or more. Reasonable measures must be taken to establish the identity of third parties when a customer is, or appears to be, acting otherwise than as a principal. There is no obligation to conduct ongoing due diligence or to obtain information from the customer on the purpose and nature of the business relationship. Due diligence requirements are not applicable to business relationships established before the Money Laundering Order of Financial institutions in the broadest sense are required to report suspicious transactions to the FIU. All cross-border movements of currency above BND 15,000 must be reported to the Royal Customs and Excise Department on arrival and the Immigration and National Registration Department on departure. All records must be kept for at least five years after the end of the business relationship. 5

6 TAXATION All tax information supplied by Deloitte Touche Tohmatsu ( Data as at 1 August Resident/non-resident Tax authority Tax year Corporate taxation A company is considered resident in Brunei if it is centrally managed and controlled there. Revenue Division, Ministry of Finance, Brunei Darussalam. The tax year is the calendar year. Companies must file their annual tax returns online by 30 June of the calendar year following the end of the financial period. Consolidated returns are not permitted; each company must file a separate return. Estimated chargeable income (ECI) returns are required to be submitted online within three months after the company s year end. Approved companies making investments meeting Brunei s economic development objectives are tax-exempt for up to either five or 11 years. The basic rate of corporation tax is 20% (55% for oil and gas companies). Companies self-assess their tax liability. Tax is payable upon submission of the annual tax returns or the submission of the ECI. There are no local state or municipal taxes on a company s income. Losses can be carried forward for up to six years, and carried back for one year. Financial instruments There are no specific tax rules for financial instruments (loans, options, futures, swaps etc.) for the costs and revenues associated with entering into such transactions. Interest and financing costs There are no specific tax rules regarding interest and financing costs. However, anti-avoidance rules may apply if the purpose or effect of any arrangement is directly or indirectly to reduce the tax liability. Foreign exchange There are no specific tax rules for foreign exchange conversions. There are no foreign exchange controls; however, banks are required to report to the tax authority any outside transfers. There are no tax reporting rules specifying the currency in which taxable profits and the tax liability must be calculated. Advance tax ruling availability There is no advance tax ruling in Brunei. Capital gains tax There is no capital gains tax. 6

7 Withholding tax (subject to tax treaties) Payments to: Interest Dividends Royalties Other income Resident companies 0% 0% 0% 0% Non-resident companies 15%* 0% 10% 10 20%** *Interest on approved foreign loans from non-resident sources is exempt from tax. **Payment for the use of or the right to use scientific, technological, industrial or commercial knowledge or information: 10%. Payment for the rendering of assistance or services in connection with the application or use of such knowledge or information: 20%. Management fees: 20%. Rent or other payments for the use of movable property: 10%. Non-resident director s remuneration: 20%. Tax treaties/tax information exchange agreements (TIEAs) Brunei has tax treaties with Bahrain, China, Hong Kong SAR, Indonesia, Japan, Kuwait, Lao PDR, Malaysia, Oman, Pakistan, Qatar, Singapore, Tajikistan, the UK and Vietnam. Currently the only country that Brunei has signed a TIEA with is France. Thin capitalisation Transfer pricing Stamp duty Cash pooling Sales taxes/vat/excise There are no thin capitalisation rules. There is no specific transfer pricing legislation. Ad valorem duties apply, inter alia, to share certificates and sales, property tenancies and leases, some capital market instruments, and bonds. Fixed duties apply, inter alia, to insurance policies, some capital market instruments, and duplicates of previously stamped documents. Brunei has no specific tax rules for cash pooling arrangements. There is no sales tax or VAT. Import duties range from 5% to 30%. Basic foods and industrial inputs are exempt from import duties. Financial transactions/banking services tax Payroll and social security taxes There are no specific financial transactions/banking services taxes in Brunei. There are no payroll taxes. Employers and employees each contribute 5% of wages to the Employees Trust Fund (Tabung Amanah Pekerja TAP) for retirement, incapacity and death benefits. Employers and employees each contribute 3.5% of wages to Supplementary Contribution Pension on top of the TAP contribution. 7

8 BANKING Major banks Bank Total assets (USD millions) 31 December 2011 Bank Islam Brunei Darussalam 4,706 Baiduri Bank 2,672 Source: March Overview There are 13 licensed banks operating in Brunei, including the domestic Islamic bank (Bank Islam Brunei Darussalam) and two domestic commercial banks: Brunei Investment & Commercial Bank and Baiduri Bank. Brunei s banking sector is dominated by Bank Islam Brunei Darussalam (BIBD) and Baiduri Bank. Foreign banks including Citibank, HSBC, Maybank, RHB Bank Berhad, Standard Chartered Bank and United Overseas Bank are active and prominent in Brunei. 8

9 PAYMENT INSTRUMENTS Credit transfers Direct debits Cheques Card payments Credit transfers are used by companies for salary and supplier payments. Electronic credit transfers can be made online, via telephone banking, or at ATMs. Telegraphic transfers are used for payments abroad. Standing orders are also available for periodic payments such as utility bills. There is no national payment system for processing credit transfers in Brunei. Credit transfers are cleared on a bilateral basis between banks. Direct debits are available in Brunei and used for low-value recurring payments such as utility bills. Direct debits are cleared on a bilateral basis between banks. The cheque is a popular cashless payment instrument in Brunei, in terms of both volume and value, and is used for both retail and commercial payments. Cheques are physically exchanged by banks each day. Funds are typically available to the beneficiary within two or three days. The cashier s order is a popular payment instrument in Brunei. Funds are typically available to the beneficiary within two or three days. The use of payment cards in Brunei is increasing. Credit and debit cards are available from most of the country s commercial banks. Visa and MasterCard are the principal credit card issuers in Brunei. Payment cards associated with China UnionPay are also issued by some banks. Each bank in Brunei establishes its own individual clearing and settlement arrangements with the card associations. Brunei s first shariah-compliant debit card was issued in conjunction with MasterCard by BIBD in The card charges users a fee instead of interest on balances. Electronic money schemes are available in Brunei in the form of reloadable pre-paid cards. E-money cards are typically used for low-value online purchases and to pay utility bills. 9

10 PAYMENT SYSTEMS Type Brunei does not have a real-time gross settlement system. The AMBD has been mandated with modernising the country s payments systems. No timeframe for this has been given. All payments are manually cleared between banks, with clearing done on a same-day basis for intra-bank cheque clearing, or within three days for cashier s orders cleared between two different banks. For same-day value for cheques, the cut-off time is 09:30. Currency centre holidays** 2nd half *, 15, 26* Jul, 8, 9, 10 Aug*, 15 Oct*, 5 Nov*, 25, 31 Dec , 14*, 31 Jan, 24 Feb, 27*, 31 May, 29*, 30 Jun, 15, 29, 30, 31 Jul*, 5, 25 Oct*, 25, 31 Dec , 3* Jan, 19, 23 Feb, 16 May*, 1, 18*, 30 Jun, 4*, 15, 18*, 19*, 20* Jul, 24 Sep*, 13 Oct*, 25, 31 Dec * The date shown may vary by plus or minus one day. These dates are derived by converting from a non-gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are determined by the sighting of a new/full moon. **Source: 10

11 CASH MANAGEMENT Domestic Notional pooling Notional pooling is permitted in Brunei. Participation is restricted to Brunei residents. Cross-border notional pooling is not permitted. Cash concentration Cash concentration is permitted in Brunei but not widely used. Participation is restricted to Brunei residents. Cross-border cash concentration is not permitted. Cross-border Lifting fees Short-term investments Cross-border payment instructions are routed via SWIFT and settled through accounts held with correspondent banks abroad. Percentage-based fees are applied on funds transfers between resident and non-resident accounts. Interest can be earned on resident and non-resident current accounts, savings accounts and demand deposits. Time deposits are available. Maturities range between one month and five years. Certificates of deposit are issued by some banks in Brunei. Maturities range up to one year. Treasury bills are available in the form of short-term government Islamic Sukuk Al-Ijara bonds, auctioned by the AMBD on behalf of the Ministry of Finance and the government. Bills are commonly issued with maturities of 91 and 364 days. Money market funds are available for conventional and Islamic investment. 11

12 ELECTRONIC BANKING Electronic banking is available and offered by the majority of the country s banks. There is no bank-independent electronic banking standard in Brunei; each bank offers its own proprietary system for corporate banking purposes. Services include balance and transaction reporting and payment initiation. Electronic banking can be carried out using ATMs, cash deposit machines, i-banking and FAST on mobile phones. Internet banking is offered by Brunei s leading commercial banks and is popular among retail users and companies. Approximately 318,000 of Brunei s nearly 410,000 inhabitants have access to the internet, an internet penetration rate of 78%. Mobile banking is offered by Brunei s leading commercial banks. Account holders are able to access account information such as balance and transaction information via SMS. There are over 530,000 mobile phone users in Brunei. In September 2012 Bank Islam Brunei Darussalam (BIBD) launched Brunei s first comprehensive mobile banking platform, BIBD Mobile. The service uses smartphones and tablets to allow customers to access banking services such as balance reporting and payment initiation. The service is currently being used by over 16,000 customers. TelBru, Brunei s largest telecommunications and information technology provider, launched its Electronic Payment Gateway (ETX) in June ETX automates payment transactions between consumers and merchants providing end-to-end transaction processing for card payments made online, at point-of-sales (POS) terminals, or through fixed or mobile payment devices. In June 2009, TelBru, together with Brunei Bay Radio (BBR) and Card Access Services (CAS) Brunei, a payment services provider in Brunei, lauched a payment service operating over the high frequency band network, called EziPay. EziPay is aimed at customers in remote locations and allows them to make payments online that are linked directly to their bank accounts, with each transaction being transmitted in real time. 12

13 TRADE FINANCE Trading partners Imports Import Singapore 33.2%, China 15.5%, South Korea 12.2%, Malaysia 10.7%, Germany 9.6%. Export Japan 45.6%, South Korea 16.5%, Australia 11.8%, Indonesia 8.4%, India 4.8%, China 4.6%. Documents In order to import goods into Brunei, a customs declaration, bill of lading, certificate of origin, commercial invoice, packing list and technical standard/health certificate are required. Banks may have their own requirements for import payments. Licences Most items can be imported under an open general licence. There are some restricted goods that require special licences, such as bottled drinking water and cement. Licences are valid for six-month periods. Taxes/tariffs and other fees Brunei is a member of ASEAN and the ASEAN Free Trade Area (AFTA). As a member of ASEAN and AFTA, Brunei has committed to lower interregional tariffs of between 0% and 5% through the Common Effective Preferential Tariff (CEPT) scheme. Certain goods such as sensitive agricultural products are exempt from this. Tariffs on 99% of the products in the inclusion list of the ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand) have been reduced to no more than 5%. More than 60% of these products have zero tariffs. In January 2010, the ASEAN-China free trade area came into effect, creating the world s third largest trading bloc, with 90% of trade and investment barriers eradicated between China and the ASEAN-6. The remaining four ASEAN members (Cambodia, Laos, Myanmar and Vietnam) will commit to the same levels by ASEAN has also established free trade agreements with Australia, India, Japan, New Zealand and South Korea. ASEAN is negotiating a free trade agreement with the European Union. Brunei is a member of the 21-member Asia-Pacific Economic Cooperation (APEC) forum, which intends to lift all trade and investment barriers in the region. Approximately 75.4% of items are exempt from customs duties. Tariff rates of 5%, 15% or 20% apply to most other goods. The maximum tariff rate is 30%. 13

14 Prohibited imports A negative list (of products that may not be imported) is in operation. Products may be prohibited or restricted for health, safety, environmental, security and religious reasons. Only non-resident non-muslims may import alcohol. Exports Financing imports and exports Documents In order to export goods from Brunei, a customs export declaration, bill of lading, certificate of origin, commercial invoice, packing list and technical standard/health certificate are required. Licences Export licences are required for alcoholic beverages, cigarettes, diesel fuel, gasoline, kerosene, rice, salt and sugar. Taxes/tariffs and other fees No taxes are charged on exports from Brunei. Prohibited exports There are no prohibited exports. Imports Commercial banks may set financing requirements for imports. Customs and excise payments apply. Exports Commercial banks may set financing requirements for exports. 14

15 USEFUL CONTACTS Autoriti Monetari Brunei Darussalam Leading banks: Baiduri Bank Berhad Bank Islam Brunei Darussalam Berhad Brunei Ministry of Finance Ministry of Industry and Primary Resources Brunei Industrial Development Authority (BINA) Brunei Investment Agency (BIA) Brunei Economic Development Board (BEDB) Association of Southeast Asian Nations HSBC contact details The Hongkong and Shanghai Banking Corporation Limited HSBC Chambers Bandar Seri Begawan Brunei and Muara BS8811 Brunei Darussalam Brunei Global Payments & Cash Management ( ) Global Trade & Receivables Finance ( ) hsbcnet@hsbc.com.bn hsbcnet@hsbc.com.bn This document is provided by HSBC Bank plc and HSBC Group members ( HSBC ) and their third party contributor. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The views and opinions expressed by the third party contributor are their own and not necessarily those of HSBC. The information contained in this document has not been independently verified by HSBC. This document contains information relating to third parties. The information does not constitute any form of endorsement by these third parties of the products and/or services provided by HSBC or any form of cooperation between HSBC and the respective third parties. Under no circumstances will HSBC or the third party contributor be liable for (i) the accuracy or sufficiency of this document or of any information, statement, assumption or projection herein or any other written or oral information provided in connection therewith, or (ii) any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document or any opinion or statement made in this document. All efforts have been made to ensure that the information contained herein is current at the first date of publication. HSBC and the third party contributor does not undertake, and is under no obligation, to provide any additional information, to update this document, to correct any inaccuracies or to remedy any errors or omissions herein. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC and the third party contributor. Any products or services to be provided by any HSBC group member in connection with this information are subject to the terms of separate legally binding documentation. 15